The Truth About UPI Charges
Starting October 15, a new rule for Unified Payments Interface (UPI) transactions comes into effect, but it's crucial to understand who it affects. For the average user, nothing changes: person-to-person (P2P) money transfers and payments to merchants
up to ₹2,000 remain completely free. The new charge, known as a Merchant Discount Rate (MDR), applies only to merchants for person-to-merchant (P2M) transactions exceeding ₹2,000. This MDR is set at 0.4% and is paid by the merchant, not the customer. So, if you pay a shopkeeper more than ₹2,000, they will bear the cost, and you will not be charged anything extra. The fee is capped at ₹300 for very large transactions. This change is not expected to affect most everyday transactions.
Special Rates for Key UPI Payments
While the standard new merchant charge is 0.4%, the rules have carved out different rates for specific essential services and investment-related transactions. For payments above ₹2,000 made for services like railways, fuel, telecom, and insurance, a flat fee of ₹5 will be charged to the merchant. This ensures that costs for these essential payments remain low and predictable. For capital market transactions, which include payments for mutual funds or stockbroking, a much lower MDR of 0.02% will apply, which is also capped at ₹300. Again, these charges are borne by the receiving merchant or entity, ensuring UPI remains a free and convenient tool for consumers.
Small Savings and Deposit Rate Updates
For those investing in government-backed small savings schemes, there is stability. The government has announced that interest rates for schemes like the Public Provident Fund (PPF), Sukanya Samriddhi Yojana, and National Savings Certificate (NSC) will remain unchanged for the October to December 2026 quarter. This means you will continue to earn the same returns on these popular investment options. In the banking sector, the RBI has introduced new rules for bulk deposits, now defined as single deposits of ₹3 crore or more. Banks must now publish their interest rates for these large deposits daily by 10 AM, bringing more transparency and uniformity. While this directly impacts high-net-worth individuals and companies, it signals a broader push for clearer banking practices that can indirectly benefit all customers.
Other Notable Banking Changes
A few other specific changes have also taken effect. State Bank of India (SBI) has revised the rules for its Basic Savings Bank Deposit (BSBD) account holders, who will now be charged ₹15 plus GST for each cash withdrawal after the first four free ones in a month. This charge applies to withdrawals from ATMs and branches. For households using subsidised LPG, completing the biometric Aadhaar authentication has become mandatory to receive the subsidy amount directly in their bank accounts. Furthermore, new rules around bank lockers continue to be enforced, clarifying the bank's liability in case of theft or fire (up to 100 times the annual rent) and mandating updated, transparent agreements.
